Top 50 Biggest Builders 2019

8%

Increase in completed houses

42,278

Predicted completions in 2019/20

21%

Increase in low-cost ownership homes delivered in the past year

£43m

Drop in grant for homes delivered by the top 50 associations this year

Digging deeper into the figures, there does seem to have been a shift in the type of homes being built by housing associations.

While there has been a small rise of around 6.5% in the number of social rent homes built, the biggest increase has been in low-cost ownership homes, which includes shared ownership.

The total number of homes delivered of this tenure was 11,248, which represents a 21% increase on last year.

That increase is even more impressive, given that last year’s figure was 22% up on 2016/17’s.

Market sale has remained relatively strong as a tenure, with 4,953 homes completed in 2018/19 compared with 4,575 last year. However, several market watchers say they expect this to fall as associations increasingly look to other tenures to cross-subsidise their social and affordable rent homes. Associations may also increasingly move away from outright sale following the introduction of regional caps for Help to Buy loans.

One of the new entries on the top 50 completions list, Torus, delivered nearly half its homes in 2018/19 as shared ownership (208 out of 454). Chris Bowen, managing director of development at Torus, tells Inside Housing that the 37,000-home association plans to deliver around 20-25% of its programme as shared ownership, with most of its new homes continuing to be for affordable rent.

Torus merged with Liverpool Mutual Homes in January, but Mr Bowen says that its increase in overall numbers (its pipeline for 2019/20 is 882, with around 1,100 targeted the following year) isn’t just down to the combination of two existing development programmes.

“The merger has created a lot more headroom to increase our delivery programme,” he explains. “We have added financial strength because of the merger.”

Torus is also another of a number of the big movers in this year’s table that is already benefitting from being one of Homes England’s strategic partners. The government’s delivery agency has identified 23 strategic partners so far and tasked them with delivering 39,000 new homes by 2022.

“It will accelerate delivery because of its flexibility,” says Mr Bowen. “If we can be flexible in the tenure then we can build at a better pace – we are not being dictated to by speed of sales.”

The biggest shift in terms of what tenure associations built in 2019/20 was a significant rise in low-cost homeownership development, including shared ownership.

Last year, there were 8,885 of these homes completed by the top 50, whereas this year the number rose to 11,248 – an increase of 27%.

L&Q leads the way, with 657 homes for low-cost ownership, up from 436 in 2017/18, while a further four associations built more than 500 units. Last year, just two landlords – Orbit and Hyde – built 500 low-cost ownership homes.

When it comes to starts in 2018/19, low-cost ownership seems an even more popular tenure choice. L&Q started 2,112 homes in this tenure – a third of its overall total. Clarion started a further 1,478, which accounts for more than half its overall development figure.

Donna Williams, development director – sales and marketing at Sanctuary Group, says that although shared ownership has only been around 10% of the association’s development in the past year, that proportion could well rise.

“We had £90m of grant in the 2016-21 [Affordable Homes] Programme and that includes a large proportion of shared ownership,” she says. “I would not be surprised to see an increase in numbers [for all associations]. I’d expect to see most housing associations delivering more.”

He adds that being a strategic partner allows the association to develop bigger schemes. It is now working on schemes of up to 300 homes, as opposed to a maximum of 170 it would have managed previously.

The biggest risers in our top 10 by completions all also benefitted from recent mergers, with Notting Hill Genesis climbing from eighth place to third and Platform Housing (a merger of Waterloo Housing Group and Fortis Living) entering at number five. Bromford, meanwhile, climbed from 13th to ninth position, delivering 1,236 homes following its merger with Merlin last year.

Bromford is another of Homes England’s strategic partners, which it says has helped it put together a pipeline of 1,400 homes over the next 10 years. Asked about the benefits of partner status, Martyn Blackman, executive director of new homes at Bromford, says: “It allows us to work more flexibly and gives the opportunity to buy land.”

This year’s top 50 associations by completions received some £43m less in grant for the homes they delivered than the top 50 did last year, despite building more homes. However, that is set to rise in the coming years, partly thanks to the strategic partnership investment.

“With grant, you have to go back and look at what was going on a few years ago,” explains David Gannicott, former group director of business development at Hyde, who retired earlier this year. “On average it takes three years from start to completion, so it’s a long gestation period. What you are seeing is a time lag.”

He says there has been a political shift in terms of making grant available for social and affordable rent homes since Theresa May became prime minister three years ago, although “there was another year before anyone realised what was going on”.

However, while that sounds positive, particularly when coupled with a growing pipeline among our top 50, it also raises a major concern when it comes to how sustainable this growth may be: political instability.

“There’s a real appetite to do more in the sector but to deliver we need a substantial increase in government investment,” warns Will Jeffwitz, policy leader at the National Housing Federation.

Associations in our Top 50 Biggest Builders survey were increasingly using modern methods of construction (MMC) to deliver homes, but the expected revolution in housebuilding has yet
to fully take hold.

In total, 5,389 homes were built by our top 50 using some form of MMC. That is 15% up on last year. However, the proportion of homes built in this way was almost exactly the same – 14% in 2018/19 compared to 13% in 2017/18.

Wheatley Group and A2Dominion were the most enthusiastic adopters of MMC, using it for 896 homes and 822 homes respectively.

However, the numbers could take a turn upwards next year after L&Q signed an offsite manufacturing deal with Stewart Milne Timber Systems.

The association hopes to use at least some element of MMC in around 65% of its new homes in the medium term, and has placed an order for its first 1,000 homes across four sites, to be delivered in the next three years.

“For non-strategic partners, grant [from the 2016-21 Affordable Homes Programme] runs out soon and that is already having an impact. If government could commit long-term funding soon then we will see numbers go up across the whole sector.

“It’s promising but it’s fragile without government coming in behind it.”

As ever, the numbers only tell some of the story when it comes to housing associations’ future as developers. The optimism from a second straight year of increasing delivery is tempered by realism about the uncertainty of future government backing.

And that is before anyone has even mentioned Brexit.

What’s happening at Housing 2019?

Dispatches from Housing 2019 – Thursday Our round-up of the third and final day

Whatever Theresa May says, social housing is still the victim of a focus on homeownership Editor Martin Hilditch gives Inside Housing’s verdict to the prime minister’s speech

Your Housing 2019 tweets: a selection of tweets from the conference

Theresa May believes in a change of direction – but will Johnson or Hunt pay any attention? Jules Birch gives his take on Theresa May’s speech to Housing 2019

Watch Theresa May’s speech: a video of the prime minister’s speech to Housing 2019 in full

Dispatches from Housing 2019 – Wednesday The key takeaways from day two of the conference and exhibition

John Healey on Grenfell, Boris Johnson and Labour housing policy Ahead of his speech to Housing 2019, the shadow housing secretary takes part in a Q&A with Inside Housing

Dispatches from Housing 2019 – Tuesday Our round-up of all the key talking points in Manchester on the first day of the conference

Housing Heroes 2019 winners announced Find out the 17 winners and 14 commendations at the ceremony on Monday ahead of the conference and exhibition

In full: Terrie Alafat’s opening address to Housing 2019 The full text of the speech given by the chief executive of the Chartered Institute of Housing to open Housing 2019

What will the Hackitt Review changes mean for you? Conference speaker Debbie Larner writes for Inside Housing about building safety

Inside Housing and Aico competition: tell us about your resident safety campaign We launch a new competition to promote fire and carbon monoxide safety

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Morning Briefing: thousands descend on Manchester for Housing 2019

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